Bond market, make room. The Securities and Exchange Commission has three new filings for bond exchange-traded funds at hand.
Grail Advisors LLC has filed to launch yet another actively managed ETF, the RP Short Duration ETF. That comes just a day after the firm filed for two other active bond ETFs and roughly a week after it launched four active equity ETFs. (You can read that story here.)
The new ETF's investments will be managed by RiverPark Advisors LLC and Cohanzick Management LLC.
The fund will invest both in U.S. government and corporate bonds with the goal of "current income with potential capital appreciation consistent with capital preservation." In other words, it will make as much money as possible without taking significant losses.
Although the prospectus is vague on the specific objective, it does aim at an average-weighted effective maturity of three years or less.
You can read Grail Advisors' SEC filing here.
iShares To Add Two Funds
iShares has filed papers with the SEC for the right to launch new bond ETFs.
The first, the iShares 10+ Year Credit Bond Fund, will track the BofA Merrill Lynch 10+ Year U.S. Corporate & Yankees Index. When launched, the fund will trade at the NYSEArca under the ticker CLY.
CLY will add an interesting new wrinkle to the fast-growing market for globally focused bond ETFs. The new fund will buy both U.S. corporate bonds and so-called Yankee bonds, which are dollar-denominated bonds issued by foreign companies and governments.
Yankee bonds do not convey the currency diversification benefit (or risk, depending on your point of view) of other foreign bonds, and are linked to U.S. instead of foreign interest rates. Some investors favor Yankee bonds because they: 1) are regulated by the SEC; 2) often offer a risk premium over U.S. securities; and 3) are rated by U.S. ratings agencies such as Moody's and Standard & Poor's, whereas most internationally listed bonds are not.
CLY’s annual operating expenses are pegged at 0.2 percent.
The second offering is the iShares 10+ Year Government/Credit Bond Fund, which will track the BofA Merrill Lynch 10+ Year U.S. Corporate & Government Index.
The fund will invest in a broad, market-value-weighted index designed to measure the performance of the long-term, investment-grade U.S. corporate and government bond markets. The fund will trade at NYSEArca under the ticker GLJ. Its annual operating expenses are pegged at 0.2 percent.
Trial by fire is one way to discover why ETF transparency matters.
Most people now realize leveraged ETFs can hurt you, but how, then, to use them?
What would a shift out of a mutual fund and into an ETF look like up close?
China A-shares in a broad emerging market fund may be the right idea at a terrible time.